WSR 98-04-036

PROPOSED RULES

SUPERINTENDENT OF

PUBLIC INSTRUCTION

[Filed January 29, 1998, 3:51 p.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 97-20-079.

Title of Rule: WAC 392-140-601 through 392-140-685, special education safety net funding.

Purpose: To implement procedures and standards for school district eligibility for state special education safety net funding for the 1997-98 school year.

Statutory Authority for Adoption: RCW 28A.150.290, section 507(8), chapter 149, Laws of 1997.

Statute Being Implemented: Section 507(6), chapter 149, Laws of 1997.

Summary: Rules are updated to reflect an increased role of the state auditor's special education program audit team, the elimination of enrollment reporting by disability category, and a number of other changes.

Reasons Supporting Proposal: Changes reflect the changing availability of data and the needs of the state safety net oversight committee.

Name of Agency Personnel Responsible for Drafting: Richard M. Wilson, Superintendent of Public Instruction, Olympia, 753-2298; Implementation: Allen H. Jones, Superintendent of Public Instruction, Olympia, 753-6708; and Enforcement: Michael L. Bigelow, Superintendent of Public Instruction, Olympia, 753-1718.

Name of Proponent: Superintendent of Public Instruction, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Proposed changes recognize safety net eligibility for special education cooperatives of fifteen or more districts, and the State Schools for the Blind and Deaf.

The application for districts above their funded percentage is simplified.

The role of the state auditor's special education program audit team is defined.

Worksheets are revised to reflect changing data availability and the needs of the safety net oversight committee for information.

The process for appealing safety net awards is redefined.

Proposal Changes the Following Existing Rules: See above.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The rule will have a minor or negligible economic impact.

Section 201, chapter 403, Laws of 1995, does not apply to this rule adoption.

Hearing Location: Wanamaker Conference Room, 2nd Floor, Old Capitol Building, 600 South Washington Street, Olympia, WA 98504-7200, on March 10, 1998, at 9:00 a.m.

Assistance for Persons with Disabilities: Contact Jim Rich by February 24, 1998, TDD (360) 664-3631, or (360) 753-6733.

Submit Written Comments to: Rules Coordinator, Legal Services, P.O. Box 47200, Olympia, WA 98504, FAX (360) 753-4201, by March 10, 1998.

Date of Intended Adoption: March 11, 1998.

January 29, 1998

Dr. Terry Bergeson

Superintendent of

Public Instruction

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-601 Special education safety net--Authority. The authority for WAC 392-140-600 through 392-140-685 is:

(1) Section ((508 of the 1995-97)) 507, chapter 149, Laws of 1997, the Biennial Operating Appropriations Act; and

(2) RCW 28A.150.290(1).

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-601, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-602 Special education safety net--Eligible applicants. (1) An individual school district of the state of Washington is eligible to apply for special education safety net moneys on behalf of its resident students. Resident students include those defined as resident pursuant to WAC 392-137-115, those enrolled through choice (RCW 28A.225.225) and those from nonhigh districts (RCW 28A.225.210). Resident students exclude those residing in another district and enrolled as part of an interdistrict cooperative program (RCW 28A.225.250).

(2) An interdistrict cooperative of at least fifteen districts in which all excess cost services for special education students of the districts are provided by the cooperative is eligible to apply for special education safety net moneys. The cooperative and the participating school districts shall be treated as a single school district for the purposes of this chapter. Participating school districts are not eligible to apply for safety net moneys individually.

(3) The Washington state school for the deaf and the Washington state school for the blind are eligible to apply for high cost individual students under WAC 392-140-616.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-602, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-605 Special education safety net--Safety net application--Basis, certification, worksheets. Application for safety net funding shall be made on Form SPI 1381 published by the superintendent of public instruction as follows:

(1) School districts may make application for safety net funding on the basis of one or more of the following:

(a) Maintenance of effort (state revenue only) hereafter referred to as MOESR. State safety net funding may be requested when a district shows a MOESR loss calculated by the superintendent of public instruction pursuant to WAC 392-140-620.

(b) Special characteristics and costs. State safety net funding may be requested by a school district with special education costs of providing services that are reasonable, but differ significantly from the assumptions contained in the state special education funding formula provided that the applicant school district meets the standards of WAC 392-140-613 and can demonstrate, pursuant to WAC 392-140-625 either of the following:

(i) The district's actual resident special education enrollment exceeds the district's funded resident special education enrollment, the district has adopted a plan of action to contain or eliminate any unnecessary, duplicative, or ineffective enrollment practices, and all available funding, including state, federal, and local if provided in the past, is insufficient to meet the expenditure level necessary for special education; or

(ii) The district's resident special education enrollment percentage is equal to the funded special education enrollment percentage and the district has incurred an adverse change in the demographics of its resident special education enrollment since the prior school year, and all available funding, including state, federal, and local if provided in the past, is insufficient to meet the expenditure level necessary for special education.

(c) High-cost individual student. A school district may submit ((not more than three)) applications ((in a school year)) for federal safety net funding for high-cost individual students meeting the standards in WAC 392-140-616.

(2) The school district making application for safety net funding shall certify that:

(a) The application complies with the respective safety net application standards of WAC 392-140-610, 392-140-613, or 392-140-616;

(b) The application provides true and complete information to the best of the school district's knowledge; and

(c) The district understands that safety net funding is not an entitlement, is subject to adjustment and recovery, may not be available in future years, state safety net funding must be expended in program 21 which impacts the amount that must be maintained for the federal maintenance of effort test, and federal safety net funding must be expended in program 24.

(3) Worksheets included with the application shall demonstrate the need for safety net funding. School districts are encouraged and may be required to submit additional information designed to assist the state oversight committee in analyzing the application.

(a) MOESR applications pursuant to subsection (1)(a) of this section do not require any worksheets.

(b) Special characteristics and costs applications pursuant to subsection (1)(b)(ii) of this section require completion of the narrative and worksheets described in WAC 392-140-625.

(c) High-cost individual student applications shall include completed budget forms SPI F-1000B and SPI E-795B, and worksheets (("A," "B,")) "A" and "C" published in the safety net application.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-605, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-616 Special education safety net--Standards--High-cost individual student applications. For districts requesting safety net funding to meet the extraordinary needs of an eligible high-cost individual special education student, the district shall demonstrate at a minimum that:

(1) The IEP for the eligible special education student is appropriate, and properly and efficiently prepared and formulated.

(2) All of the following criteria apply to the high-cost individual student:

(a) Costs eligible for safety net consideration must be direct expenditures for services required in the IEP.

(b) In order to deliver appropriate special education to the student, the district must be providing services which incur additional costs which exceed available district annual average per-pupil revenues, including state, federal and local revenues, by seven thousand dollars. This threshold amount shall be adjusted downward by the portion of the year for which the individual student was actually enrolled. For example, for a student served and reported for only one-half the year, the threshold amount shall be reduced by one-half. The state safety net oversight committee may set a lower threshold for small school districts.

(c) The total cost of educational services must exceed ((the sum of any MOESR gain calculated pursuant to WAC 392-140-620 and)) any carryover of federal flow-through special education funding as of August 31 of the prior school year.

(d) The cost of providing special education services, as directed in the IEP, for this student would be detrimental to the school district's ability to provide necessary services to the other students being provided special education in the district.

(3) The state safety net oversight committee shall adapt the high cost individual student application as appropriate for applications prepared by the Washington state school for the blind and the Washington state school for the deaf.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-616, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-625 Special education safety net--Demonstration of special characteristics and costs. ((Special characteristics and costs)) Applications pursuant to WAC 392-140-605 (1)(b) must demonstrate ((adverse impacts. Instructions to the application narrative and worksheets shall be published by the superintendent of public instruction with the safety net application)) special characteristics and costs as provided in this section.

(1) ((Adverse enrollment impacts shall be demonstrated as follows:

(a))) Applications from districts with actual enrollment greater than funded enrollment pursuant to WAC 392-140-605 (1)(b)(i) must demonstrate, through the application narrative, that the district has adopted a plan of action to contain or eliminate any unnecessary, duplicative, or ineffective enrollment practices. Applicants shall cooperate with the special education program audit team and shall provide the team with any information required by the team to review and verify certifications made on the safety net application.

(((b))) (2) Applications from districts with actual enrollment equal to funded enrollment pursuant to WAC 392-140-605 (1)(b)(ii) must demonstrate, through the application narrative and on application worksheet (("A,")) "A" and "B," an adverse change in resident special education enrollment characteristics and program costs since the prior school year.

(((i))) (a) The application narrative completed by the school district shall provide any information and explanations related to special enrollment characteristics as required in the published instructions.

(((ii))) (b) Application worksheet "A" shall ((use enrollments reported by and/or for the district to the superintendent of public instruction and published by the superintendent of public instruction for this purpose and shall measure the resident special education enrollment difference by disability category. Differences shall be expressed as a headcount difference and as a percent of the district's current school year annual average full-time equivalent resident basic education enrollment calculated pursuant to WAC 392-121-133)) demonstrate a financial need by displaying the school district's special education expenditures, revenues, and special education enrollments for the prior and current school years. Application worksheet "B" shall display changes in staff services and staff-to-ratios between the prior and current school years.

(((2))) (c) Cost differences between the current and prior school years ((resulting from the adverse enrollment impacts demonstrated pursuant to subsection (1) of this section)) shall be ((demonstrated)) explained in the application narrative. The application narrative shall detail cost differences in services to students which occurred between the current school year and the prior school year. Such details shall include costs and savings associated with each change in services.

(((3))) (d) A fiscal need shall be demonstrated through the application narrative, on application worksheets "A" and "B," and other information available to the state oversight committee. Fiscal need shall be demonstrated as follows:

(((a))) (i) The application narrative shall ((be completed by the school district and)) provide information and explanations related to fiscal need pursuant to the published instructions.

(((b))) (ii) Application worksheets "A" and "B" shall ((be completed by the school district and shall)) demonstrate a fiscal need in excess of the sum of:

(((i))) (A) All current school year safety net awards to the district for MOESR or special characteristics and costs;

(((ii) Any MOESR gain as calculated pursuant to WAC 392-140-620;

(iii))) (B) Any previous high cost individual safety net awards for the current school year; and

(((iv))) (C) All other available revenue for special education including all carryover of federal special education revenue.

(((4))) (iii) The school district shall provide additional information as requested by the state oversight committee.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-625, filed 9/18/96, effective 10/19/96.]

NEW SECTION

WAC 392-140-630 Special education safety net--Special education program audit team--Purpose, procedures. The special education program audit team consists of staff of the state auditor's office funded in the Biennial Operating Appropriations Act to audit special education programs that exhibit unusual rates of growth, extraordinarily high costs, or other characteristics requiring the attention of the state safety net oversight committee. When reviewing a school district's special education program, the audit team shall review and verify any certifications and supporting information provided by the district in a safety net application. The audit team shall provide the results of the review to the state oversight committee. The results of the audit team's review may be considered by the oversight committee in determining, adjusting, or recovering safety net awards.

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AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-640 Special education safety net--((Definition--))State oversight committee--Membership, structure. Membership of the state oversight committee shall consist of: Staff of the office of superintendent of public instruction, staff of the office of state auditor, staff of the office of financial management, one or more representatives from a school district(s), and one or more representatives from an educational service district.

(1) The state oversight committee members will be appointed by the office of superintendent of public instruction.

(2) The state director of special education shall serve as an ex officio, nonvoting committee member and act as the state oversight committee manager.

(3) Members of the state oversight committee from school districts and/or educational service districts will be appointed based on their knowledge of special education program service delivery and funding, geographical representation, size of district(s) served, and other demographic considerations which will guarantee a representative state committee.

(4) Alternate members shall be appointed. In the event a member is unable to attend a committee meeting, an alternate member shall attend.

(5) Membership appointments shall be made for a period of one year. The oversight committee manager may replace a portion of the committee each year in order to enhance representation.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-640, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-656 Special education safety net--((Safety net appeal--Procedures)) Request for review and reconsideration. ((While special education safety net funding is not an entitlement,)) An applicant district may ((appeal)) request review and reconsideration of an action of the state oversight committee made pursuant to WAC 392-140-646.

(1) The district shall ((appeal)) make the request in writing to the superintendent of public instruction within thirty days of the date that the state oversight committee's written determination notice is sent to the district pursuant to WAC 392-140-643(11).

(2) The applicant district shall request reconsideration of the state oversight committee's action on one or more of the following grounds:

(a) The action was outside the statutory authority of the committee;

(b) The action failed to follow prescribed procedures;

(c) The action erroneously interpreted or applied the law;

(d) The action was not supported by substantial evidence; or

(e) The action was inconsistent with the agency rules regarding safety net funding.

(3) If the superintendent of public instruction finds grounds for reconsideration pursuant to subsection (2) of this section, the superintendent shall request reconsideration of the action by the state oversight committee. The superintendent's request shall state the grounds for reconsideration supported by the facts considered by the superintendent.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-656, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-660 Special education safety net--Approved application--Initial state special education safety net allocation. The total amount allocated to school districts may not exceed the authorized appropriation.

(1) The initial special education safety net allocation of state moneys for applicants shall be the smaller of:

(a) The amount requested by the school district; or

(b) The amount authorized by the state oversight committee.

(2) ((The state oversight committee shall determine what portion, if any, of a special characteristics and costs application amount is to be credited against a MOESR gain determined pursuant to WAC 392-140-620.

(3))) The initial special education safety net allocation of state moneys for special characteristics applicants under WAC 392-140-605 (1)(b) shall be prorated if the state total year-to-date allocations for all safety net applications under WAC 392-140-605 (1)(a) and (b) exceed the authorized appropriation for that school year.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-660, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-665 Special education safety net--Approved application--Initial federal special education safety net allocation. If documented needs for federal discretionary funds exceed the appropriation the superintendent of public instruction may access additional federal funds.

(1) The state oversight committee shall determine what portion, if any, of a high cost individual application amount is to be credited against ((the sum of any MOESR gain determined pursuant to WAC 392-140-620 and)) any carryover of federal flow-through special education funding from the prior school year.

(2) The initial allocation amount of federal special education safety net moneys for a school district is the amount authorized by the state oversight committee and may be prorated if the total year-to-date allocations for such applications exceeds the authorized appropriation.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-665, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-675 Special education safety net--Adjusted special education safety net allocation. Safety net allocation amounts for a school district may be adjusted during the school year as follows:

(1) The initial state and federal special education safety net allocation amounts for a school district may be adjusted to reflect changes in factors for which additional or revised information becomes available after the awarding of the initial safety net allocation ((and such information results in the district being eligible for a lesser allocation)). This means:

(a) MOESR awards shall be reduced or nullified when a recalculation pursuant to WAC 392-140-620 results in a loss smaller than any loss previously calculated pursuant to WAC 392-140-620.

(b) Special characteristics and costs awards ((shall)) may be reduced or nullified when ((a recalculation pursuant to WAC 392-140-620 results in a gain which is larger than any previously calculated pursuant to WAC 392-140-620 and against which safety net applications are credited pursuant to WAC 392-140-660(2) and/or 392-140-665(1))) the school district's actual revenues and expenditures for the school year differ significantly from the estimates on which the initial safety net award was based.

(c) A school district's safety net award may be adjusted by the safety net oversight committee based on the results of the review conducted by the special education program audit team pursuant to WAC 392-140-630.

(2) The initial special education safety net allocation of state moneys for special characteristics applicants under WAC 392-140-605 (1)(b) shall be subject to additional proration if total state allocations for all safety net applications under WAC 392-140-605 (1)(a) and (b) exceed the authorized appropriation for that school year.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-675, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-680 Special education safety net--Recovery of state allocations to school districts. State safety net funding is provided in revenue account 4121. Safety net funding:

(1) Shall be recovered or reduced for the following reasons:

(a) Unexpended account 4121 revenues are recovered in the subsequent school year pursuant to WAC 392-122-900.

(b) Any necessary adjustments pursuant to WAC 392-140-675 were not previously made.

(c) The periodic and/or final MOESR calculation performed by the superintendent of public instruction determines that a lesser amount is needed for maintenance of effort (state revenue only).

(d) The district did not use or failed to apply for available Medicaid or federal flow-through special education funding.

(e) The application contains a falsification or deliberate misrepresentation, including omission of a material fact.

(f) The state auditor's financial and legal compliance audit includes findings which materially affect the school district's safety net application.

(2) May be recovered or reduced for the following reasons:

(a) IEPs are determined at a later date through state audit or child count verification to be inappropriate or improperly prepared, ((have impacts material in nature to)) and appropriate and proper preparation would materially affect the justification or amount of need for safety net funding.

(b) The school district has carryover of federal flow-through special education funding from the previous school year.

(c) The state oversight committee finds grounds for adjustment in the special education program audit team's review pursuant to WAC 392-140-630.

[Statutory Authority: RCW 28A.150.290 and 1995 2nd sp.s. c 18 as modified by 1996 c 283. 96-19-095 (Order 96-15), 392-140-680, filed 9/18/96, effective 10/19/96.]

AMENDATORY SECTION (Amending Order 96-15, filed 9/18/96, effective 10/19/96)

WAC 392-140-685 Special education safety net--Recovery of federal allocations to school districts. High cost individual student federal special education safety net allocations:

(1) Shall be recovered or awards reduced ((when)) for the following reasons:

(((1))) (a) The application contains a falsification or deliberate misrepresentation, including omission of a material fact.

(((2) The school district has carryover of federal flow-through special education funding from the prior school year.

(3))) (b) The allocation is unexpended for the purpose allocated including but not limited to situations where the student leaves the district or has a change in services. For students who transfer to another Washington public school district, expenditures for specialized equipment purchased with these funds shall not be recovered provided the district transfers the equipment to the other school district.

(((4))) (c) The IEP is determined at a later date, through state audit or child count verification, to be inappropriate or improperly prepared and ((impacts)) appropriate and proper preparation would materially affect the justification or amount of need for safety net funding.

(((5) A recalculation pursuant to WAC 392-140-620 results in a gain larger than any previously calculated pursuant to WAC 392-140-620 and against which safety net applications are credited pursuant to WAC 392-140-665(1) and/or 392-140-675 (1)(b). This means MOESR adjustments are made first to state safety net awards and then to federal safety net awards.)) (2) May be recovered or awards reduced for the following reasons:

(a) The school district has carryover of federal flow-through special education funding from the school year for which the award was made.

(b) The district's actual revenues are significantly higher than estimated revenues on which the award was based or the district's actual expenditures are significantly lower than the estimated expenditures on which the award was based.

(c) The state oversight committee finds grounds for adjustment in the special education program audit team's review pursuant to WAC 392-140-630.

Recovery adjustments not made in the current school year shall be added to the amount calculated pursuant to WAC 392-140-616 (2)(c) for the following school year. Such amounts reduce federal safety net awards in the following year.